The U.S. Federal Trade Commission has reached a settlement with YouTube network Machinima over allegations that the company contracted popular YouTubers to create paid advertisements under the guise of unbiased, independently produced video content.
The settlement follows up on an FTC complaint issued earlier today, alleging that Machinima did not adequately disclose that its members were paid to produce pro-Microsoft content in the months leading up to the launch of the Xbox One console.
According to the FTC, Machinima directed chosen partners to produce content explicitly stating their dedication to the Xbox family of consoles and their enthusiasm for the Xbox One launch title Ryse: Son of Rome, in particular. Machinima partners enrolled in the campaign were ordered to produce videos containing “two to three talking points detailing what you like about [Ryse]” while “showcas[ing] Microsoft in positive light,” among other marketing-focused requirements.
The FTC cited two popular YouTubers who agreed to the deal. Adam “SkyVSGaming / SkyDoesMinecraft” Dahlberg was allegedly paid $15,000 to produce videos showcasing Ryse and the Xbox One in a positive light, while Tom “TheSyndicateProject” Cassell was paid $30,000 for similar content.
“Cassell’s videos appear to be independently produced and give the impression that they reflect his personal views,” the FTC’s complaint reads. “Nowhere in the videos or in the videos’ descriptions did Cassell disclose that [Machinima] paid him to create and upload them.”
“In truth and in fact, the video reviews for Xbox One and the Launch Titles did not reflect the independent opinions of impartial video game enthusiasts,” the FTC’s report continued. The organization additionally notes that “The failure to disclose [paid endorsements], in light of the representations made, was, and is, a deceptive practice.”
As part of its settlement terms with the FTC, Machinima agrees to “clearly and prominently disclose a material connection, if one exists, between the Endorser and the advertiser whose product is being endorsed.”
The FTC adds: “Under the proposed settlement, Machinima is prohibited from similar deceptive conduct in the future, and the company is required to ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements.”
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